Baidu Stock Looks Fairly Priced At $134
Source: Trefis Team
Touted as the Google of China, Baidu is the leading search engine in China with over 70% market share. Baidu is the number one Chinese language search provider as well as the most trafficked website in China. Its main search operation provides search for websites, audio files, and images.
Baidu’s platform also includes Baidu Union, a network of third-party websites and software applications. The company competes with global search engines like Google, Yahoo and Microsoft’s Bing. Notably, Bing and Baidu recently struck a deal whereby Bing provides the English search results for Baidu.
We’re launching coverage of Baidu with a $134 Trefis price estimate, which is roughly in line with the current market price.
Baidu at a Glance
As shown in our breakdown of Baidu above, the three main sources of value for Baidu are:
1. Search Advertising (87% of value)
2. Search and Content Partnerships (8% of value)
3. Display Advertising (2% of value)
Search advertising accounts for the bulk of Baidu’s value because the company is the leading search engine in the large and fast growing Internet market in China.
We estimate that Baidu currently has nearly 80% share in a market that has about 530 million Internet users that conduct an average of 70+ search queries per month. That implies nearly 360 billion search queries will be conducted on Baidu in 2011, and we estimate that Baidu will generate about $4.70 for every 1,000 search queries implying about $1.7 billion in 2011 search advertising revenues for the company.
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